Relevant and even prescient commentary on news, politics and the economy.

Conspiracy Theories: How to Pick Out the Plausible Ones

Conspiracy Theories: How to Pick Out the Plausible Ones

This is an age of rampant conspiratorialism.  Bill Gates is behind the pandemic because he wants to shoot you full of vaccines.  No wait, it’s all those 5G cell towers.  Or maybe it’s bioterrorism from China.  Or just a hoax perpetrated by international capital to undermine Donald Trump, the people’s tribune.  The right wing disinformation machine cranks out this stuff constantly, but paranoid fantasies also emanate from the left/alternative world.

So to counter the conspiracy pandemic, mainstream experts have come forward to advise us on how to detect and puncture unfounded rumors.  The problem I see is that sometimes there really are conspiracies, and it isn’t immediately obvious how to separate the ones that might be true from the purely crazy.

In the public interest, I offer the following rule of thumb.  A conspiracy, of course, is an agreement by a group of insiders to keep something important secret from the public.  If the group is tightly organized, motivated and able to operate separately from those on the outside, it is capable of waging a conspiracy.  If you relax these assumptions, however, you need additional groups to hide the initial conspiracy—in other words, secondary conspiracies.  And if the secondary conspirators aren’t tight enough a third ring of conspiracies is required.  As soon as you find yourself imagining lots of interlocking conspiracies to keep the central one secret you’ve wandered over the line.

Comments (14) | |

BOND YIELDS AND MONETARY VELOCITY

I have been monitoring  the close relationship between bond yields and monetary velocity ( personal income/zero maturity money) for years without coming to strong conclusion about what to make of it.  In particular, it displays the long term secular rise and fall of bond yields before and after 1980..

 

I do not know of any other economic variable that parallels bond yields so tightly for such a long period.  OK, first question.  Which way does the causal relationship work?  Is it rates driving velocity or velocity driving yields?  Or is it some other variable driving both?  I use to think velocity was a function of real interest rates.  At least that was consistent with the monetarist school of economic thought, especially in explaining the 1930s depression.  But now we are back to negative real interest rates and it does not yet  appear to impact this relationship.  If we are at a long term secular bottom in yields I would expect to see monetary velocity start to rise. But it has not happened yet. But now that we are back to uncharted waters, I would be interested in hearing what others have to say about velocity and bond yield

 

 

Comments (3) | |

“Dr. Doom” At It Again: Predicts 10-Year Depression

“Dr. Doom” At It Again: Predicts 10-Year Depression

That would be Nouriel Roubini of NYU who got his moniker back during the Great Recession, which he called pretty well in 2006.  He did this clearly yesterday in an interview in The Intelligencer, although he has been pushing something like this for some time now, bringing in all sorts of things like climate change and more pandemics to reinforce this long run forecasr, although he thinks in a decade there may be a sufficient restrucuting of the economy to improve the situation.  While he mostly does not talk about what should or could be done in the US, he seems to improve of a German type economy where the unemployment rate has risen only 1% in comparison to the massive increase towards 20%  we have sseen in the US.  Of course, Germany has managed the coronavirus much better than has the US, but they also have their Kurtzarbeit labor system that tends to preserve employment better during downturns, not to mention a broader social safety net as part of its social market economy.  He says things might have been better if we had Bernie Sanders as president, but then notes that compared to Merkel in Germany and even Boris Johnson in UK, Sanders is a right winger.

 

Comments (2) | |

Coronavirus, the economy, and the election: the jury is still out on all three

Coronavirus, the economy, and the election: the jury is still out on all three

There is some housing data out today; I’ll probably have a post up about it tomorrow at Seeking Alpha, and I’ll link to it here.

Meanwhile, the jury is still out on the effects of the “reopening” of many States on coronavirus infections.

Here’s a graph of the 7 day average of tests, new infections, hospitalizations, and deaths, divided between the Boston, NYC, Philadelphia metro areas and Michigan on the one hand and everywhere else:

Testing has continued to increase dramatically, while cases “everywhere else” have plateaued or possibly begun to slightly rise again. This still shows hospitalizations and deaths declining.

 

Comments (1) | |

A Compromise on Liability

A Compromise on Liability

So Mitch McConnell and the senate Republicans want blanket employer liability protection as the price of another round of economic support.  They have this leverage because Democrats kept postponing their agenda until they were the only ones with a list of things they wanted to spend money on.

(This illustrates classic bargaining theory to a T.  Bargaining power depends on how much you think you will lose if the agreement is delayed [Rubinstein] or fails completely.  Democrats feared economic damage to the public if bailout bills weren’t approved immediately.  Once the financial markets were backstopped Republicans considered the rest to be low stakes.  Hence the strong tilt to McConnell et al.)

So here is a possible Democratic counter:

OK, you want liability protection.  Let’s give it to any employer, large or small, that sets up a health and safety committee to oversee protections on the job, elected by the whole workforce, one person one vote.  If protections are consensual, liability is waived.  Otherwise proceed at your own risk.

This would be good policy, and it has the political advantage of placing liability within a larger, readily communicable frame about participation and consent.

Comments (3) | |

Woke Is Reactionary: The Small Business Lending Edition

Woke Is Reactionary: The Small Business Lending Edition

We live in a drastically unequal society.  Everywhere you look you will find injustice, constraint and exploitation.  Being a member of a racial or other minority increases the odds you will end up on the short end, so what should we do about it?  There’s a progressive solution, to change the system so injustice, constraint and exploitation are minimized.  And then there’s the woke solution, to demand benefits targeted to minorities (and women) that will more evenly distribute the injustice, constraint and exploitation that remains.

You can support the woke solution, but please don’t confuse it with progressive social change.

For a current example, look at this recent op-ed in the New York Times by Pamela Shifman and Salamishah Tillet, “How We Spend Tells Us Whose Lives Matter”.  They point out, “only 12 percent of the black and Latino [small business] owners in a survey who applied for aid reported receiving what they had asked for.”  I don’t know how that compares to white/Anglo owners, and no link is provided to the source they relied on.  But let’s assume with them this means minority SB owners have been disadvantaged in the expanded lending program to counter the effects of the coronavirus.  Knowing this country, I wouldn’t be surprised if this were true.

Two reasons are given for the disparity.  First, minority-owned businesses are less likely to have an existing loan relationship with a bank, and private banks are being used to funnel loans authorized by Congress.  Second, these businesses have slimmer reserves and are less able to survive the process of application, review and disbursement.  Again, let’s assume this analysis is correct.

The progressive solution would be to either impose greater obligations on the private banking system or bypass it altogether in administering the program.  If commercial banks are to be deputized to distribute public funds they should be required to do so not just for their existing clients but their share of the applicant pool, and streamlined procedures should be in place to get the money out the door as quickly as possible.  Or perhaps it would have been possible to forego using commercial banks altogether (or in part) and to quickly ramp up a dedicated lending facility operating in conjunction with the Fed or a specialized government agency.  (How much easier all of this would have been if we had a nationwide public banking system already in place.)

And then there’s the woke solution: “providing dedicated funding opportunities for minority and women-owned businesses, and within that funding pool, for women of color-owned businesses.”  So the inadequacies and unfairness of the lending arrangement are OK as long as they don’t disproportionately fall on these groups.  I suppose white business owners locked out of the deal can console themselves with their privilege.

Again, the woke program is a choice some may make; it’s goal is to take the racism and sexism out of exploitation.  Just don’t confuse social justice with a more equally distributed injustice.

Comments (2) | |

Mask-less While Standing in A Crowd

This is the same stuff/sh*t, I am seeing in Michigan. I wish I could give them one week of Covid so they could learn. The following is from Digby at Hullabaloo:

I just watched another 60 something mask-less Republican woman in Arizona standing in a crowd of others just like herself tell the news media that she thinks the Coronavirus is not worse than a cold or the flu and she has no fear of it. (She also weirdly said that they don’t even have a name for it yet, which she didn’t explain.)

Maybe she will listen to this fellow:

Comments (20) | |

COVID-19 progress, take 2

In response to the comment on my last post . . . rolling 7 day average death rates with the peak for each country set to 100.

 

We peaked later than most countries other than Germany, which seems to be making better progress than us.  We may be doing as well (or as badly) as the U.K.  It seems like France and Spain are also outperforming the U.S. on this metric.

Comments (7) | |